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Congress Considers Another Online Sales Tax

By Lisa Barron   |   Friday, 15 Feb 2013 01:06 PM

A new bipartisan online sales tax bill has been introduced in Congress that would allow states to collect from out-of-state retailers for products sold over the web to their residents.

According to Politico, the Marketplace Fairness Act, which resolves differences between three similar bills that failed last year, would not force the states to collect a sales tax but would simply give them the authority to do so.

“This bill does not tell the states they have to do it; it just enables them to do it,” said Arkansas GOP Rep. Steve Womack at a press conference. “How many more small brick-and-mortar obituaries do we have to see before we recognize that we have a problem?”

Democratic Sen. Dick Durban of Illinois, one of the bill’s co-sponsors, said he has asked Montana Sen. Max Baucus, chairman of the Finance Committee, to “make this a priority.”

According to Politico, the Republican and Democratic sponsors of the measure are determined to act on it this year.

Under the current system, most states with sales tax depend on residents to voluntarily pay taxes on their online purchases, but few actually do. The federal bill would allows states to collect a tax on products sold over the Internet to their residents even if the companies don't have a physical presence in the state.

Supporters of the legislation say online businesses have benefited unfairly from different tax treatments and that state and local governments have lost out on revenue.

But opponents argue the legislation could unduly burden retailers, especially small ones, with having to comply with too many different kinds of tax jurisdictions.

Phil Bond, executive director of the WE R Here coalition, which represents small online businesses, said newest online tax bill has the "same proponents, same disregard for small Web businesses, and the same ill-advised effort to use the Internet as a platform for taxation rather than innovation" as previous bills.

"We trust this effort, like the ones before it, will be defeated by those who favor small businesses and innovation," he said.

Leading the bill in the Senate are Durbin and Republican Sens. Mike Enzi of Wyoming and Lamar Alexander of Tennessee. In the House, the key sponsors are Womack and Democratic Rep. Jackie Speier of California.

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